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NAV20
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RE: Airbus Wants Launch Aid For A350 Revamp

Thu May 18, 2006 11:56 am

Quoting Par13del (Reply 66):
It get's difficult reading threads that have anything to do with launch aid and or subsidies when there is no starting base for discussion. How exactly were the US able to state a case for the WTO to take up and vice versa for the EU counter claim?

Par13del, the World Trade Organisation was set up to promote free international trade (i.e. free of artificial barriers). The principle is that no member country should bar another's exports by imposing import tariffs, or advantage its own exports by giving subsidies.

The WTO has to be reckoned with because it has 'teeth' - if, in its view, a particular country has broken its free trade rules, it can apply sanctions. A few years ago it ruled that a particular form of US steel subsidy was illegal, and required all member states to stop buying American-made steel and steel-based products until Bush withdrew the subsidy. If the EU decides to defy the WTO over Airbus, it runs the risk of similar sanctions being applied to European exports. Such sanctions could very well affect exports from the whole European Union (25 countries), not just the four 'Airbus' countries (Britain, Germany, Spain, and France).
 
NAV20
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RE: Airbus Wants Launch Aid For A350 Revamp

Thu May 18, 2006 12:21 pm

Quoting RichardPrice (Reply 67):
BAE has a 20% share in Airbus, thats all they are selling because thats all they have. EADS can then sell that 20% on and retain a 20/80 split, regardless of the price bought or sold for. There would be no change in ownership of EADS because that corporation has its own shareholder structure, we are simply talking about Airbus shares here.

I see the area of misunderstanding, RichardPrice. There are no actual Airbus shares, haven't been since Airbus was merged into EADS in 2000.

BAE was a part-owner of Airbus which declined to enter the merger. Thus a deal was done by which it left its equity (buildings, plant, machinery, 'goodwill' etc.) in the Airbus Division of EADS, and also subscribed its share of extra working capital when required, in return for receiving 20% of the profits of the Airbus Division, year by year.

It received no representation on the EADS Board. So it was in the position of sharing the risks while having no part in the decisions.

I don't see any other organisation buying into any such 'sleeping partner' role. Anyone who considered putting a lot of extra capital into EADS would demand proper representation and a share in control. Which would require drastic revisions to the structure of EADS; in particular, an end to the present cosy arrangement whereby the French appoint one half of the EADS Board and the Germans appoint the other half.
 
atmx2000
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RE: Airbus Wants Launch Aid For A350 Revamp

Thu May 18, 2006 1:13 pm

Quoting NAV20 (Reply 100):
A few years ago it ruled that a particular form of US steel subsidy was illegal, and required all member states to stop buying American-made steel and steel-based products until Bush withdrew the subsidy.

The WTO required no such thing, they have no enforcement power. What they did was sanction retaliation via tariffs, not necessarily on steel. The EU implemented tariffs against a wide variety of products. Now what I found obnoxious about the retaliatory tariffs is that the EU designed them to target US states that would be key battlegrounds in the 2004 election. Such a blatant attempt for a foreign power to manipulate US elections should have been protested.

Quoting Katekebo (Reply 88):
EU and Airbus will do whatever they want, regardless of what USA and Boeing say about it. Even if WTO rules in favor of USA, EU may choose to ignore the rulling and proceed as it pleases them.

On the other hand, even if EU helps Airbus to launch the A350, I don't think it will push Boeing towards bankrupcy. And if the EU aid really hurts Boeing and US national interests, American government has many options to help Boeing to fight back (tax incentives, high margin contracts, even direct financial help) - and the rest of the world won't be able to do anything about it (assuming that they care in the first place).

If the WTO rules in favor of the US, the US would be allowed to levy tariffs or engage in some other retaliation against EU products, not necessarily aircraft, without the EU being allowed to retaliate. Imagine if the US levied a large tariff on Airbus aircraft. That could mean the difference between the biggest A32X customers in the world (US, NW, UA) plus the other US customers who account for a quarter of the A32X operating, adopting the next Airbus narrowbody or choosing the Boeing.
 
Joni
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RE: Airbus Wants Launch Aid For A350 Revamp

Thu May 18, 2006 8:32 pm

Quoting Khobar (Reply 86):

Thank you for admitting that Airbus does get unfair subsidies then, since they've received millions in non-repayable grants in support of their operations, grants that, according to you, would not be available to Boeing.

I wrote that There's no exclusivity for Airbus.

Quoting BoomBoom (Reply 97):
EADS/Airbus gets all the same subsidies that Boeing gets, defense contracts, local government infrastructure improvements, tax breaks etc. But they get one thing that Boeing doesn't--launch aid.

Really, do you have a source? The EU parliament had made a comparison and concluded that the EU should double it's aerospace subsidies in order to level the playing field with the US. Sure, there can be infra improvements and tax breaks, but not 3 BILLION EUROS worth of them.

Anyhow, somehow I get the idea that if the launch aid was discontinued, and the monetary value given to Airbus as a tax break, or even double the monetary value as a tax break, it would apparently be OK to some people here.

Or then, as I suspect, the tax break would be an evin subsidy for Airbus, whereas for Boeing it's OK and innocent. This is the "Fox News perspective" I was talking about earlier.
 
RichardPrice
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RE: Airbus Wants Launch Aid For A350 Revamp

Thu May 18, 2006 8:37 pm

Quoting BoomBoom (Reply 97):

Oh this again. Give it a rest. Your links to UK gov't documents mean nothing

Hahhahahahahah oh hahahahahhaha thats a good one. Facts mean nothing to you, obviously!

The actual agreement in question 'means nothing' - I think you just demonstrated why I dont take you seriously  Smile
 
Halibut
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RE: Airbus Wants Launch Aid For A350 Revamp

Thu May 18, 2006 9:51 pm

As I stated before . The road ahead for Airbus is a tough one . Airbus must completely revamp there Twin Aisle mid-size aircraft line up , Totally ! While , there profits will be weak & Boeing's strong !

It's not surprising why Airbus is requesting Launch Aid !

http://www.forbes.com/business/2006/...g-airbus-profit-cx_0518oxford.html

Oxford Analytica
Boeing Set To Fly Past Airbus
Oxford Analytica 05.18.06, 6:00 AM ET

Quoting Forbes:
The European Aeronautic Defense and Space Company (EADS), the parent firm of Airbus, Tuesday announced a first-quarter net profit of 516 million euros ($666 million). Despite bumper profits, the future of Airbus' commercial position against Boeing depends on its wide-body jets. Its position in this market segment looks weak.

As a result of this wide-body product softness, Airbus saw the value of its backlog fall below Boeing's in the first quarter of 2006, for the first time in five years.

Given the size of the market at stake, Airbus has little choice but to announce a full redesign of its forthcoming A350 aircraft in order to compete with the 787. This will lead to increased outlays, diminished strategic options for EADS, and medium-term damage to Airbus's wide-body market position. Boeing looks set to steal a march on its rival over the next six-eight years.

Halibut

[Edited 2006-05-18 15:15:07]
 
NAV20
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RE: Airbus Wants Launch Aid For A350 Revamp

Thu May 18, 2006 10:14 pm

Quoting Joni (Reply 103):
Anyhow, somehow I get the idea that if the launch aid was discontinued, and the monetary value given to Airbus as a tax break, or even double the monetary value as a tax break, it would apparently be OK to some people here.

Joni, it is necessary to make a distinction between regional aid and the sort of 'launch aid' that Airbus was getting.

Regional aid (it used to be called Development Area Assistance in the UK) is common in many parts of the world. It is designed to persuade industry to set up in areas that need more employment, or higher-grade employment. That's what Washington State gives Boeing; and I'm sure that Airbus gets it in Toulouse, Wales, and Hamburg. It is perfectly legitimate and is not prohibited by the WTO.

Regional aid is normally conditional on the company concerned establishing a plant in a given needy area and keeping it open for an agreed period; failing which it is repayable immediately.

'Launch aid' was fundamentally different from regional aid. It was not tied to the creation of a given amount of employment in needy areas, It was given to the company as a whole to spend wherever and however it liked.

It was not provided as 'targeted funds' for spending on bricks and mortar and machinery; it was subscribed as 'venture capital', for Airbus to spend straight away on risky development projects which might or might not succeed. The governments concerned don't even seem to have bothered to obtain the Critical Project Appraisals specified in the 1992 Agreement.

In the first place, that's careless misuse of taxpayers' money. They might just as well have taken it to a casino and played roulette with it. In fact, they'd have had a better chance of winning that way since, as I explained earlier, there is no way they can 'win' with launch aid; the best they can hope for is to get their money back.

Secondly, and more important, though, it will have bred an 'easy come, easy go' attitude among Airbus management. Giving people money with no strings attached is the best way of ensuring that they won't bother to spend it wisely.
 
BoomBoom
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RE: Airbus Wants Launch Aid For A350 Revamp

Thu May 18, 2006 10:57 pm

Quoting RichardPrice (Reply 104):
Facts mean nothing to you, obviously!

Your facts mean nothing.

The problem is Richard, your so called facts do not address the entire issue of subsidies. Your "facts" only apply to the UK subsidies and not to those of France andGermany. On these you said:

Quote:
I have no idea and I couldnt careless

Airbus To Spend $10 Bln On New Plane (by Tugger May 10 2006 in Civil Aviation)

Any meaningful discussion on subsidies must include ALL the subsidies.

You keep bringing up the 1992 agreement, knowing full well that only applies to only one family--the A380.

You seem to believe because something appears in a government document (UK parliamentary written evidence) it's to be accepted without question.

How nice, the subsidizer gets to write his own evidence. What a joke!

I think you just demonstrated why I dont take you seriously.

As I said, let the WTO sort this out.
 
deltadc9
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RE: Airbus Wants Launch Aid For A350 Revamp

Thu May 18, 2006 10:58 pm

Quoting NAV20 (Reply 106):
Regional aid is normally conditional on the company concerned establishing a plant in a given needy area and keeping it open for an agreed period; failing which it is repayable immediately.

While what you said is correct, it is a little misleading. For the most part in the US, a company will make a deal with the state, county, or city government for a lower tax rate for a certain period of time, usually less than 10 years, contingent of that company maintaining a certain level of employment within the taxable location.

No money flows to the company in this scenario, therefore it is not aid, or subsidy. That money not paid is money that would never be paid anyway because the lower tax rate is all that would ever happen anyway. The only scenario where this money becomes "real" is if the company does not live up to the agreements the difference becomes the penalty.

No different that the list price on a car, ever paid list? No, because all you have to do is go somewhere else not to. Therefore, list price is merely a negotiating tool and the difference between list price and what you pay for a car is not considered income to you or you would pay taxes on it.

The same applies here, those rates are never charged to new lines of business and are never intended to be charged to them, only to mature ones. How much of a temporary discount depends on how many jobs are created, how much they pay, for how long, and how much of the start-up money stays in the taxable district.

Why does this happen, lots of reasons, but I can give you one very relevant example I am very familiar with. In southwest Indiana, over the past many decades, the union workers have has a history of strikes, labor unrest, unreasonable demands, and drug and alcohol issues. These problems are due to the fact that for a long long time the area was booming with furniture and heavy equipment manufacturing, mining, oil drilling, plastics and jobs were plentiful.

Then the labor problem reputation combined with changing business climates caught up with them International Harvester, Chrysler, Zenith, Arkla-Servel, Most of Whirlpools operations, dozens of plastics factories, and many other smaller factories left town, a town of 130,000. Alcoa Warrick operations just outside of town used to be their biggest operation in the world, that shrank after several strikes too.

How do you get industry back? You must compete with other counties, and states. Toyota (which is non union) was lured with massive infrastructure promises and tax breaks or they wound have no reason at all to take that chance.

What this means is that every tax rate above what they are paying now was never real, there was never a chance of paying more because there are too many Evansville Indiana's out there driving those rates down to their level.

They got market rates, nothing more, nothing less. Same for Boeing, who by the way, considered Evansville for the 787 line as a way to make their deal with Washington State. Evansville never had a chance, but that was not why they considered it, the deal was.
 
Joni
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RE: Airbus Wants Launch Aid For A350 Revamp

Thu May 18, 2006 11:49 pm

Quoting RichardPrice (Reply 104):
Hahhahahahahah oh hahahahahhaha thats a good one. Facts mean nothing to you, obviously!

In the Fox News Perspective, facts are completely irrelevant. Anyone demonstrating any interest in facts is immediately considered suspicious. (e.g. potential communist or terrorist)

Quoting NAV20 (Reply 106):
Regional aid (it used to be called Development Area Assistance in the UK) is common in many parts of the world. It is designed to persuade industry to set up in areas that need more employment, or higher-grade employment. That's what Washington State gives Boeing; and I'm sure that Airbus gets it in Toulouse, Wales, and Hamburg. It is perfectly legitimate and is not prohibited by the WTO.

So, in your accounting if the economic value of the "launch aid" loans (meaning the interest rate differential) would be handed to Airbus as regional tax breaks instead of the current system, you'd have no problem with it at all?

Quoting NAV20 (Reply 106):


'Launch aid' was fundamentally different from regional aid. It was not tied to the creation of a given amount of employment in needy areas, It was given to the company as a whole to spend wherever and however it liked.

Actually you're completely wrong here. The launch aid is given specifically to finance specific projects that create employment and economic activity in specified areas and industries.

Quoting BoomBoom (Reply 107):
Any meaningful discussion on subsidies must include ALL the subsidies.

According to the Fox News Perspective ("FNP"), this means "all subsidies given to the other guys".

Quoting DeltaDC9 (Reply 108):
No money flows to the company in this scenario, therefore it is not aid, or subsidy. That money not paid is money that would never be paid anyway because the lower tax rate is all that would ever happen anyway.

Therefore you, too, would be OK if Airbus' launch aid benefit was to be given to it in the form of tax breaks? Good to have that cleared up. Or are you proposing to employ the FNP? That way Boeing's regional tax breaks would be OK but Airbus' wouldn't, for obvious reasons. (those being that facts don't matter)
 
khobar
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RE: Airbus Wants Launch Aid For A350 Revamp

Fri May 19, 2006 12:06 am

Quoting Joni (Reply 103):
I wrote that There's no exclusivity for Airbus

You said Boeing's subsidies would be limited to repayable loans. We already know that Airbus's subsidies are not limited to repayable loans.

So yes, there is exclusivity for Airbus.
 
deltadc9
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RE: Airbus Wants Launch Aid For A350 Revamp

Fri May 19, 2006 12:10 am

Quoting Joni (Reply 109):
Therefore you, too, would be OK if Airbus' launch aid benefit was to be given to it in the form of tax breaks?

Are you implying by that they receive no such breaks in Europe? By the way, their facilities in the US can and will receive the same deals. I think the Toyota deal I mention above is proof that these deals are there for ALL comers as long as jobs are involved.

If Airbus wants to build a new facility in Europe, and Bulgaria offers them a huge tax advantage, GO FOR IT!

If Airbus wants to expand a current facility to add jobs and wants a tax break, GO FOR IT!

If Airbus goes to Germany or France and demands a tax cut for existing facilities and production, that's a different ballgame, but that is not what you are asking.
 
NAV20
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RE: Airbus Wants Launch Aid For A350 Revamp

Fri May 19, 2006 12:10 am

Quoting Joni (Reply 109):
So, in your accounting if the economic value of the "launch aid" loans (meaning the interest rate differential) would be handed to Airbus as regional tax breaks instead of the current system, you'd have no problem with it at all?

As I've said, Joni, I'm sure that Airbus does get regional incentives as well. And I've no objection to that. But launch aid consisted of grants from central governments, not regional authorities.

Quoting Joni (Reply 109):
The launch aid is given specifically to finance specific projects that create employment and economic activity in specified areas and industries.

Wrong again, I'm afraid. The 'specific projects' (the factories and plant) wre already in being. As I said, the money wasn't intended to finance (nor was it spent on) 'bricks and mortar'. It was provided for use for (speculative) design and development of new products. As I said, 'venture capital'. And the governments didn't even bother to ask for or get any 'Critical Project Appraisals' so they could assess the prospects for success.
 
khobar
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RE: Airbus Wants Launch Aid For A350 Revamp

Fri May 19, 2006 12:11 am

Quoting RichardPrice (Reply 104):
The actual agreement in question 'means nothing' - I think you just demonstrated why I dont take you seriously

Article 6(2)???

Quoting Joni (Reply 109):
In the Fox News Perspective, facts are completely irrelevant. Anyone demonstrating any interest in facts is immediately considered suspicious. (e.g. potential communist or terrorist)

Can you give a single example where Fox News reported inaccurately or labeled anyone a communist/terrorist for being interested in facts?
 
baroque
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RE: Airbus Wants Launch Aid For A350 Revamp

Fri May 19, 2006 12:12 am

Quoting Par13del (Reply 66):
Think the best for me in this regard is to just let the WTO sort it out and avoid any discussion on the subject as I'm really not learning much

Indeed Par13del, most of this, apart from some factual input from RP and a some other honourable exceptions, is close to irrational. It is surprising that nobody has asked how much Boeing has repaid of the (UK) launch aid for the Mustang (aka P51). I remember those events well!

One problem is to make an assumption that parallels can be drawn between two such different systems of Government as the EU countries and the US. They are different folks, relax and accept it. Sure the unemployment rates differ http://www.cia.gov/cia/publications/factbook/fields/2129.html but then so do the incarceration rates http://www.kcl.ac.uk/depsta/rel/icps...ld-prison-population-list-2005.pdf
There seems little point in comparing unlike systems and then be surprised to find that practices differ.

Reading through the materials that RP has posted, it does appear that, so far, Airbus has paid back all loans that have been due and the Parliamentary documents seem to indicate that the A320 program, at least, is now paying royalties over and above the payments associated with the "loan" part of the launch aid. Feel free to correct me if I have read the parliamentary documents incorrectly.

For the A320 program, the UK seems to be ahead - that is BAE has repaid the original sums, plus interest plus additional royalties. I can only assume the same applies to the other countries that gave launch aid. That I dont know as much about the other loans is probably more due to my lack of French and German language skills than secrecy on their part.
 
RichardPrice
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RE: Airbus Wants Launch Aid For A350 Revamp

Fri May 19, 2006 12:15 am

Quoting Khobar (Reply 113):
Article 6(2)???

Unless Im missing something, I fail to see your point...?

Article 6 in the 1992 Agreement is:

Quote:

Article 6

General purpose loans

Parties shall assume no liability for specific loans that aircraft manufacturers make or make available, through direct loans, guarantees, or otherwise, to airlines, other than through official export credit financing consistent with the Large Aircraft Sector Understanding of the OECD Understanding on Official Export Financing.
 
NAV20
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RE: Airbus Wants Launch Aid For A350 Revamp

Fri May 19, 2006 12:35 am

Quoting Baroque (Reply 114):
It is surprising that nobody has asked how much Boeing has repaid of the (UK) launch aid for the Mustang (aka P51). I remember those events well!

Enjoyed the digression, Baroque.  

Was North American absorbed by Boeing? NA designed the Mustang? Anyway, depending on what Packard had to pay for the licence to build the Merlin engine which made a proper aeroplane out of it, the British probably made on the deal in the end.  

[Edited 2006-05-18 17:37:03]
 
Joni
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RE: Airbus Wants Launch Aid For A350 Revamp

Fri May 19, 2006 12:35 am

Quoting Khobar (Reply 110):

You said Boeing's subsidies would be limited to repayable loans. We already know that Airbus's subsidies are not limited to repayable loans.

Actually, that part of my original post was supposed to be a bit of a clever joke.

Quoting DeltaDC9 (Reply 111):

Are you implying by that they receive no such breaks in Europe? By the way, their facilities in the US can and will receive the same deals. I think the Toyota deal I mention above is proof that these deals are there for ALL comers as long as jobs are involved.

No, I'm not implying that since to my knowledge it's entirely possible that they do get such. However, I'd be surprised if those were even nearly on the scale of Boeing's USD3B tax break. You're free to dig up some material related to those if you feel like it. Therefore, my point (which you in true FNP fashion neglect to address) was that if the relatively minor economic benefit of the launch aid loans (consisting of the few-percent point difference in interest rate) was given to Airbus in the form of tax breaks, then you'd have no problem with that at all. (unless we consider the FNP, of course)

Quoting NAV20 (Reply 112):

As I've said, Joni, I'm sure that Airbus does get regional incentives as well. And I've no objection to that. But launch aid consisted of grants from central governments, not regional authorities.

Again, you're wrong here since they're loans, not grants.

Quoting NAV20 (Reply 112):

Wrong again, I'm afraid. The 'specific projects' (the factories and plant) wre already in being. As I said, the money wasn't intended to finance (nor was it spent on) 'bricks and mortar'. It was provided for use for (speculative) design and development of new products. As I said, 'venture capital'. And the governments didn't even bother to ask for or get any 'Critical Project Appraisals' so they could assess the prospects for success.

The specific projects in this context are the aircraft r&d projects, as you very well know, which result in aircraft production, as you also very well know.

The fact that something like that needs pointing out reveals all there is to know of the quality of this discussion.
 
NAV20
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RE: Airbus Wants Launch Aid For A350 Revamp

Fri May 19, 2006 12:44 am

Quoting Joni (Reply 118):
aircraft r&d projects, as you very well know, which result in aircraft production

Not all, or even most, R & D exercises result in commercially-successful projects. Therefore they are highly speculative, and are not, in my submission, a suitable area in which to risk the taxpayers' money.

The fact that something like THAT needs pointing out reveals.....I dunno, maybe that a lot of people have only very limited experience of business.
 
deltadc9
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RE: Airbus Wants Launch Aid For A350 Revamp

Fri May 19, 2006 12:55 am

Quoting Joni (Reply 118):
Therefore, my point (which you in true FNP fashion neglect to address) was that if the relatively minor economic benefit of the launch aid loans (consisting of the few-percent point difference in interest rate) was given to Airbus in the form of tax breaks, then you'd have no problem with that at all. (unless we consider the FNP, of course)

I have no problem with fair competition, but that is not what you are really talking about.

One tenth of a percent on big money is huge, not minor. If the difference was actually minor, then the political and legal costs of taking the aid would outweigh the benefits.

Also, the whole Fox News thing is childish and misguided. If you don't like their editorial positions don't listen, but that's not the news. The news is the news and Fox, like CNN, MSN, Bloomberg, and the networks all do a pretty good and similar job.

If you cant separate the editorial content form the actual news, that's a comprehension problem you need to deal with and therapy is available.
 
NAV20
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RE: Airbus Wants Launch Aid For A350 Revamp

Sat May 20, 2006 11:39 am

The four governments involved appear to have made a 'masterly indecision' - do nothing but talk until Farnborough:-

"European governments held talks with Airbus (EAD.PA: Quote, Profile, Research) on Tuesday over a potentially controversial redesign of its A350 jet and set themselves a July 17 deadline for funding decisions which could intensify a trade dispute with the United States.

"Germany, France, Spain and Britain hold key positions in the European planemaker either directly or through industrial interests, and have been criticised by the United States for agreeing to put up development loans for the future A350.

"French Transport Minister Dominique Perben said a final decision on funding must be taken by July 17, coinciding with the Farnborough air show outside London."


Presumably Airbus will just sit there like a dog with its tongue out until then? Or maybe more like a rabbit in the headlights.  Smile

Especially interested by this bit:-

"German junior economy minister Georg Wilhelm Adamowitsch told a news conference Europe would not change its stance on the loans without some progress in talks that are aimed at avoiding litigation at the World Trade Organisation."

Difficult to believe that the EU is still thinking in terms of 'negotiations'. Boeing doesn't need or want 'launch aid', I can't see that there's anything to negotiate about.

http://today.reuters.com/business/ne...0States.%20REUTERS/Arnd%20Wiegmann
 
User avatar
Revelation
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RE: Airbus Wants Launch Aid For A350 Revamp

Sun May 21, 2006 2:52 pm

Quoting Joni (Reply 84):
After all, if Japan can decide to improve its foothold in the aerospace sector, then surely the EU can as well.

And if the EU can improve its foothold in aerospace, so can China. For instance, they can decide to give free capital and labor to an enterprise set up to directly compete with A and B. No problem, right? They have 1.2 billion people who want jobs too, after all.

Quoting DeltaDC9 (Reply 87):
I think it is dishonest and deceptive to include tax breaks. This is not money Boeing "receives" and it is not money that would ever realistically be billed because all Boeing would have to do is set up the 787 line somewhere else that would not send those bills. States are like separate countries in that respect, they compete for jobs just like countries do.

Yes, I see a big difference between a government giving me a very low interest loan for 1/3 of my new house, versus a government deciding to put in a new street and give me a tax break if I move to their jurisdiction.

Quoting Glideslope (Reply 92):
IMO, this is the beginning of the end for Airbus as we know it.

Yet somehow their competition has survived after their last two CEOs have resigned in disgrace and their last CFO is in jail.
 
deltadc9
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RE: Airbus Wants Launch Aid For A350 Revamp

Mon May 22, 2006 10:31 pm

Quoting Revelation (Reply 121):
Yes, I see a big difference between a government giving me a very low interest loan for 1/3 of my new house, versus a government deciding to put in a new street and give me a tax break if I move to their jurisdiction.

Whether you are being a smartass or not, there is a big difference, that street is not just for you, it is for you and whoever wants to compete with you.

And what about the other guy that cant get that preferential financing? Doesn't that make you feel like you won the lottery?
 
baroque
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RE: Airbus Wants Launch Aid For A350 Revamp

Tue May 23, 2006 2:37 am

Quoting RichardPrice (Reply 9):
And there it is again, the mistaken belief that the launch aid doesnt have to be paid back.

It seems that being shown the agreement is not enough. Apparently suffering from a similar problem the UK Government now refers to the funds not as a grant, not as a loan, but a "repayable launch investment" see:
House of Commons Trade and Industry Committee The UK Aerospace Industry
Fifteenth Report of Session 2004�05 Report, together with formal minutes Ordered by The House of Commons to be printed 22 March 2005 �12.00

A second document from 2000 spells out for the UK some of the outcomes. I know Richard Price has spelled out the implications of the agreement so I apologise for the repetition. I have no idea why I cannot find a later set of accounts, but the 2000 set seems to give a good idea of what happens for the UK:

Non statutory Liabilities charged to Votes (sorry I have not figured out how to do columns in the editor, just follow the year headings):

BAe Development costs guarantee Outstanding Outstanding
..for the A330/340 programme 31.3.98 31.3.99
Million GBP 46 33

Treaty re Concorde..... ............ Unquantifiable Unquantifiable

Measures relating to individual ... programmes 1998-99 1999-00 2000-01
Outturn Ttl prov Ttl prov
Aerospace support Million GBP 55.9 71.9 57.8

EH101 MillionGBP - 0.005 0.005
Trent 50 60 53.2
MoD administration costs 0.2 0.12 0.25
Devel wings A340-500/600 - - -

Less
B203 Aerospace support 104.8 127.4 134.7
(1) Launch aid for RB211 and other engines 40.7 41.0 20.2
(2) Launch aid relating to airframes incl A320... 60.8 80.0 100.0
(3) VAT recoveries Private Sector Launch aid 0.013 0.098 0.100
advice

There are pages of this stuff but I have tried to extract the most relevant. It appears that aid (repayable launch investment) for the new A340 wings had not yet arrived. A380 not listed, presumably yet! The second group should be subtracted from the totals in the first group. The data show that net investment was negative in those three years by roughly from GBP 50 million to 70 million a year.

No doubt in some other years, outgoings would exceed income.

THE BAE 2000 report states: "During 2000, launch aid repayments charged to the profit and loss account in respect of our Airbus programmes reduced substantially to �122m (1999 �176m). Launch aid repayment was completed in 1999 on single aisle programmes, with repayments moving onto a royalty basis from 2000. The charge to the profit and loss account for these programmes amounted to �22m (1999 �74m), while on the A330/340 programme, repayments amounted to �100m (1999 �102m)."

It is interesting that the numbers in the Government tables are lower than the BAE numbers. The reasons for that are not clear, but the funds reported in the table may be more restrictive than those in the BAE report or it could be the definition of the reporting periods.

One last point, we have a definitive time (1999) for completion of repayments of the A32x initial investment and a move to a royalty payment. Since that time, HMG has received a nice little earner per copy of the A32x.
 
NAV20
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RE: Airbus Wants Launch Aid For A350 Revamp

Tue May 23, 2006 4:10 pm

Must admit that, despite myself, I begin to feel some sympathy for the Airbus people - not top management, but the people lower down who have to try to make stuff like this sound like 'good news':-

"PARIS (AFX) - The governments of the UK, Germany, Spain and France will make a decision by mid-July on how much aid could be given to Airbus for the launch of its new A350 jet, French Transport Minister Dominique Perben said.

"'We are going to make a collective decision before the opening of the Farnborough airshow' in the UK on July 17, he said during a press conference here.

"Airbus will first have to inform us of its choices on this project," Perben said, adding that Airbus co-CEO Noel Forgeard has agreed to provide transport ministers with details of the A350 programme before the Farnborough show.

"Perben's comments come ahead of the first round of settlement hearings at the World Trade Organisation, over an ongoing trade dispute between the EU and the US over billions of dollars worth of alleged government aid to aircraft manufacturers, scheduled to begin in June."


http://www.forbes.com/business/feeds/afx/2006/05/22/afx2763358.html

Roughly translated, seems to me that Perben is saying to Forgeard and Co., "We're not going to hurry this. In any case, the Germans, British, and Spaniards all have to go along with it. You'll have to give us chapter and verse on the figures, we don't want any more Gellman Reports. And thanks for the lift to Farnborough, but don't expect a tip; you've just let me in for a lousy time at the WTO all through June, thanks a bunch....."

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